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PF Registration for Employers

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EMPLOYEE PROVIDENT FUND

The Employee Provident Fund or EPF or PF is a saving plan introduced by government for the financial support after retirement. This is applicable for all salaried employees in India.

Employees’ Provident Fund (EPF) is regulated under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and the authority which regulates this act is Employees Provident Fund Organisation (EPFO). EPF is an advantage to the employees which will support them at the time of retirement. PF can be considered as a perk provided to employees by the employer over basic remuneration.

It is mandatory for all the employer to register their entity under EPFO if they have 20 or more employers appointed in their organization.

Importan for Registration

It is mandatory for all the employer to register their entity under EPFO if they have 20 or more employers appointed in their organization.

This registration involves organisations to contribute a fixed amount towards Employee against their PF out of employee salary and wages.

Employees’ Provident Fund (EPF) is regulated under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and the authority which regulates this act is Employees Provident Fund Organisation (EPFO).  According to this act, if an employer or any organisation fails to get EPF registration or represents false of facts in order to avoid PF payment, then the employer shall be liable for a penalty of INR 5,000/-

Eligibility –

PF registration for Employer is mandatory -

  • Required by all types of entities like private limited, proprietorship, partnership etc.
  • Mandatory for all the organisation having employees more then 20
  • Government organisation under Central government
  • Factory having 20 or more people

Benefits -

  • Risk coverage for the employees
  • Same PF account can be carried forward to another organisation
  • Employee Deposit Insurance Scheme under which 0.5% of the salary is deducted from the life insurance premium.
  • urgent availability of funds
  • Covers pension.

Components of PF Format -

PF number is 22 digit code and it looks like- AA/ABC/0000000/123/0000000.

Components in the PF number format include-

  • AA: First 2 characters represents Regional Office code
  • ABC: Next 3 characters represents the Regional Office / Sub-regional Office code
  • 0000000: Next 7 digits represents employer’s registration code PF
  • 123: Next 3 digits tell the extension assigned to the employer (if any)
  • 0000000: Last 7 digits represents employee’s PF account number

Contribution towards EPF -

  • Contributed on the basic pay of the employee.
  • Contribution from the employee’s salary is 12% 
  • Employer also contribute same amount which also includes 8.33% towards Employee Pension Scheme (EPS)

Interest rate on PF deposits decreased to 8.5% from 8.65% for the FY 2018-19

Documents required -

  • PAN card of the company
  • Certificate of Registration
  • Copy of the cancelled cheque;
  • Partnership Deed/ MOA and AOA/ LLP deed/ Society or Trust deed
  • PAN card and Aadhaar Card of the Directors or Partners or Proprietor
  • GST certificate
  • List of the employees with date of joining
  • Name of the bank and the Bank’s address where the entity’s bank account
  • DSC

Registration Procedure

  • Register the organization with EPFO, login details will be provided
  • Register DSC
  • Provide the Employer’s Details -
  • First Name – name of the company same as mentioned in Income Tax Department
  • Employer PAN
  • Select user Name
  • Mention a Hint Question/ Answer
  • Enter PIN sent on the registered mobile number
  • Activate E-mail link

Types of Provident Fund (PF)

  • Statutory Provident Fund (SPF) – It is regulated under Provident Funds Act, 1925 and maintained by the Government and Semi-Government organisations, local authorities, railways, universities and educational institutions.
  • Recognized Provident Fund (RPF) – An organisation which is recognized by the Commissioner of Income Tax is called as recognized provident fund. Any organisations having 20 or more apply for RPF. Maximum salaried individuals contribute to this type of Provident Fund.
  • Unrecognized Provident Fund (UPF) – This includes organisation that are not recognized by Commissioner of Income Tax.
  • Public Provident Fund (PPF) – It is controlled by the Central Government where any member (employee or employer) can open a PF account at the State Bank of India or other nationalized banks.
  • A minimum of INR 500 is required to open PPF and maximum it can have INR150,000 deposit per annum. There will be a certain amount of interest which will be credited every year.

S. No.

Type of Provident Fund

Tax

1

Statutory Provident Fund

Tax is exempted on employer’s contribution but is deducted on employee’s contribution.

Interest will be credited to PF and the retirement payment are tax exempt.


2

Recognized Provident Fund

Employer’s contribution towards PF will be taxable only when it exceeds 12%.

Tax is deducted from employee’s contribution.

If the rate of interest credited to the provident fund is more than 9.5%, tax will be deducted. 

The retirement payment will be tax exempt under-

  1. If the employer rendered a continuous service of 5 or more years.
  2. If the employee has been terminated due to certain reasons such as health issues, discontinuation of business, etc.
  3. If the employee resigns and then joins in another organization.
  4. If the entire balance standing to the credit of the employee is transferred to his/her account under a pension scheme in section 80CCD.

3

Unrecognized Provident Fund

An employer’s contribution towards provident fund is tax exempt. The retirement payment is taxable under -

  1. Payment received in respect of employer’s contribution and interest is taxable under the head Salaries.
  2. Payment received in respect of interest on employee’s contribution is taxable under the head Income from other sources.
  3. Payment received in respect of employee’s contribution is not chargeable to tax.

4

Public Provident Fund

offers tax benefit under section 8OC


Tax Treatment of Provident Fund

Particulars

Recognised PF

Unrecognised PF

Statutory PF

Public PF

Employer’s Contribution

Contribution to 12% of salary is exempt, above that is added to salary income of the employee.

Not taxable

Not taxable

Not taxable

Employee’s Contribution

Section 80C Deduction

No Section 80C deduction

Section 80C Deduction

Section 80C Deduction

Interest on PF

Any interest over and above 9.5% is added to Income from Salaries. Until 9.5% interest is exempt.

Not taxable

Exempt

Exempt

Amount withdrew at retirement time

Exempt subject to certain conditions*.

Contribution from employer and interest on that is taxable under the head Income from Salaries; Contribution by an employee is not taxable, and employee’s contribution interest is taxable under the head Income from Other Sources.

Exempt

Exempt

Conclusion

From the above discussion, it’s clear that the registration under EPF is not only mandatory but also provides tax benefits to both the employer and the employee. The EPF interest rate now is at 8.5% for the FY2019-2020. If you want to register under EPF, feel free to contact us.

BOOK A FREE CONSULTATION

Get help from an experienced legal adviser. Schedule your consultation at a time that works for you and it's absolutely FREE.

Author
Shamshad Alam
Experienced Digital Marketer with a demonstrated history of working in the internet industry. He likes to write about the latest technology trends, Skilled in Digital Marketing likes. Search Engine Optimization, SMO, SEM, PPC, Content Writing, and, Designing, etc.